MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 $70,000 $125,000 $35,000 1 Payback period for the proposal is: a. 3 years b. 2 years с. 4 years d. 3.08 years 2345

MNO company is evaluating a proposal for purchase of equipment which will cost $180,000. The cash inflows from the use of equipment is given below: Year Cash flow $60,000 $40,000 $70,000 $125,000 $35,000 1 Payback period for the proposal is: a. 3 years b. 2 years с. 4 years d. 3.08 years 2345

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: Flora Company has recorded the following cash flows at the end of each year for a project. If the…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: A construction company is considering procuring one of two types of heavy construction equipment (A…

A: Here in this question, Payback period, benefit cost ratio , Project to be selected and the…

Q: Gallant Sports is considering the purchase of a new rock-climbing facility. The company estimates…

A: Net present value (NPV) is the value of all future cash flows, both positive and negative,…

Q: nformation on four investment proposals is provided below: Investment Proposal A B…

A: A financial statistic that measures the desirability of a project is the profitability index, which…

Q: Manama Manufacturing has $170,000 to invest in either Project A or Project B. The following data are…

A: Net present value refers to the concept of determining the current total value of expected future…

Q: A company is considering three independent projects for October 2021. The three projects are project…

A: Company finance is about capital budgeting which means selecting the best investment which will…

Q: Perit Industries has $135,000 to invest. The company is trying to decide between two alternative…

A: Net present value (NPV) is the present value of cash inflows and outflows from a capital project.…

Q: Maple Tree Industries has $265, 000 to invest. The company is trying to decide between two…

A: NPV : It stands for net present value. Net present value is the financial calculation to determine…

Q: Perrot Industries has $325,000 to Invest. The company is trying to decide between two alternative…

A: NPV is appropriate for assessing projects with variable cash flows over time since it considers the…

Q: The company is considering three capital investment proposals. At this time the company only has…

Q: A proposed project requires an initial cash outlay of $75,000 for equipment and an additional cash…

A: NPV= Pv of cash flow=[-75,000/(1+0.122)0]+[-25,000/(1+0.122)1] +[ 50,000/(1+0.122)2+[…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: Cash flow refers to the movement of money into or out of a business or financial system, typically…

Q: The cash flows for two small raw water treatment systems are shown. calculate the net present value…

A: Net present value is determined by deducting the current value of cash flows from the initial…

Q: e estimates of a project: Initial investment $50,000 Annual…

A: PW or Present worth can be computed using PV function in excel. PV function will compute present…

Q: Rapp Hardware is adding a new product line that will require an investment of $1,454,000, Managers…

A: ACCOUNTING RATE OF RETURN Accountimg rate of return is one of the Important Capital Budgeting…

Q: Given the data in the following table, what is the IRR of Project B? 4 $170 $190 0 -$600 -$520 1…

A: To find the Equivalent Annual Series (EAS) for Project A, we need to convert the uneven cash flows…

Q: An investment project provides cash inflows of $975 per year for eight years. a. What is the project…

A: The payback period of a project is calculated using following equation Payback period = Initial…

Q: An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual…

A: The payback period is the time period taken by business to cover the initial or original cash…

Q: Sandhill, Inc., is purchasing machinery at a cost of $ 3,544,720. The company's management expects…

A: Payback period is The length of time required for an investment to generate cash flows sufficient…

Q: a. Use exhibits 26-3 and 26-4 to help compute the net present value of the proposal to sell the…

A: Net present value It is the difference between the present value of cash inflow and the present…

Q: Nestle Ltd. Production department realized that one of their machines needs to be replaced and the…

A: Net present Value is the difference between Present Value of cash Inflows and Initial Investment.…

Q: Rihanna Company is considering purchasing new equipment for $452,400. It is expected that the…

A: Payback period is the time required to recover the initial investment amount. Always lower payback…

Q: A potential project involves an initial investment in machinery of RO.1,200,000 and has the…

A: Payback Period = Years before full recovery + (unrecovered cost at the start of the year/ cashflow…

Q: MHD is considering an expansion project that requires an initial outlay of OMR120,000. The project…

A: Required Return = 12% Depreciation expense each year = 10,000 Year Net Income Net operating Cash…

Q: A company is considering a project with the following characteristics: Cash outflows: Immediate…

A: The payback period is a financial metric that represents the length of time required for a project…

Q: Total cash inflows $325,000 Measure the Payback Period for this in

A: The payback period is the amount of time it takes to repay the cost of an investment.Simply said,…

Q: Initial investment in equipment Enitial investment in working capital $ 150,000 $ 30,000 $ 160,000 $…

A: The cash flow from the operation would be the after deduction of operating expenses and taxes and…

Q: The following data concern an investment project (Ignore income taxes.): Investment in equipment…

A: A financial metric called net present value (NPV) is used to assess how profitable a project or…

Q: Sheridan Company is considering purchasing new equipment for $397,800. It is expected that the…

A: Cash payback period is the time required to recover initial investment. Cash payback period =…

Q: he management of Wyoming Corporation is considering the purchase of a new machine costing $375,000.…

A: Npv is also known as Net present value. It is a capital budgeting techniques which help in decision…

Q: Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to the…

A: Project A reflects the the best investment for Boston since Project A has the highest cash flows in…

Q: Shell Camping Gear, , is considering two mutually exclusive projects. Each requires an initial…

A: Payback period is the time period required to cover initial investment of the project. It is a…

Q: A company is planning to purchase a new machine to expand its production. The machine is costing OMR…

A: Capital budgeting techniques helps in evaluating the proposed alternatives based on the cash inflows…

Q: A manufacturer is contemplating the purchase of either of two machines at a cost of Kshs 155 million…

A: Cost of Capital (r) = 15% p.a. Initial Outflow of Machines Machine A= 155 Machine B= 180 Calculation…

Q: X Company must purchase a new delivery truck and is using the payback method to evaluate two…

A: Pay-back period: The time where the cash inflow becomes equal to the cash outflow and after this…

Q: Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated…

A: Net Present Value(NPV) is excess of PV of inflows over PV of outflows related to investment proposal…

Q: A company that manufactures magnetic membrane switches is investigating two production options that…

A: The future worth analysis is a kind of quantitative analysis that helps in evaluating the capital…

Q: The cash flows for 2 mutually exclusive alternatives are shown below. Determine which should be…

A: Given: Item Description Vendor A Vendor B Initial Cost ($200,000) ($550,000) Annual…

Q: In an energy systems installation, following financial requirement was identified. Capital cost of…

A: Payback period is the time period in which initial investment recoverable. There are two types of…

Q: ving three relations, the correct one to calculate the annual v Cash Flow cost, S ual cost, S per…

A: Annual worth can be calculated by present value method and future value method.

Q: A company is considering purchasing a $10,000 machine that will reduce pretax operating costs by…

A: The computation of after-tax operating cash flow per year:

Q: The management of Ortega Manufacturing has three different proposals under consideration. The…

A: We can calculate annual cash inflow by using pay back period formula. Because payback period formula…

Q: A new asset is expected to provide service over the next four years. It will cost $510,000,…

A: Net present value is the difference in present value of cash flow and initial investment of the…

Q: Perit Industries has $125,000 to invest. The company is trying to decide between two alternative…

A: Net present value is a capital budgeting method that determines the present value of the cash flows…

Q: Information on four investment proposals is given below: Investment Proposal A B C D…

A: The Profitability Index (PI) is a financial metric that evaluates the attractiveness of an…

Q: Draw a 5-year cash flow diagram representing the following cash flows to build springs: (Chapter 2)…

A: Initial investment in plant and equipment $50K Answer:

Q: The management of XYZ Beverage Company is considering to purchase a new equipment to increase the…

A: Payback period means the period when we get back our investment amount. Formula for payback period…

Question

MNO company is evaluating a proposal for purchase of equipment which will cost
$180,000. The cash inflows from the use of equipment is given below:
Year
Cash flow
$60,000
$40,000
$70,000
$125,000
$35,000
4.
Payback period for the proposal is:
a. 3 years
b. 2 years
c. 4 years
d. 3.08 years
DELL
123 45

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year0 ($11,368,000)1 $2,112,5892 $3,787,5523 $3,300,6504 $4,115,8995. $ 4,556,424 Round to two decimal places. For year 0 , its initial investment .
Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment $ 210,000 Working capital required $ 50,000 Annual net cash inflows $ 100,000 Maintenance and repairs in third year $ 40,000 Salvage value of equipment in fourth year $ 30,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming the company’s required rate of return is 12%, the profitability index of the project is closest to:
Rihanna Company is considering purchasing new equipment for $440,000. It is expected that the equipment will produce net annual cash flows of $55,000 over its 10-year useful life. Annual depreciation will be $44,000. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.) Cash payback period years
The information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729
X will pay $80,000 for a project that will generate the following cash flows: YEAR 1 2 3 4 5 7 8 CASH FLOW $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $30,000 $30,000 The payback period for the investment is: O 7 years O 6.25 years O 7 years O 7.33 years
Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $. Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -870,000 -300,000 -920,000 250,000 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $-1
The following data relates to an investment proposal: Investment in equipment Net annual cash inflow $32,000 5,000 expected Working capital required Salvage value of equipment Life of the project 8,000 2,000 10 years Working capital will be recovered at the end of the project's life. Using an 6% discount rate, the net present value of the project is closest to: $10,380 ($2,084) None of the other answers are correct $5,916 $2,380
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Operating Net Cash Year Income Flow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The cash payback period for this investment a. 4 years Xb. 3 years c. 5 years d. 20 years
company is considering three independent projects for October 2021. The three projects are project X, project Y and project Z. Given the following cash flow information, calculate the payback period for each. If the company requires a 3-year payback before an investment can be made, which project(s) would be accepted? Year Project X ($) Project Y ($) Project Z ($) O (Investment) -2,000 -$10,000 -$5,000 1. -2,000 -6,000 -2,000 800 4,000 5,000 3 600 3,000 5,000 4 600 2,000 5,000 400 2,000 2,000
The production department is proposing the purchase ONE automatic insertion machine. It has identified three machines (A, B and C). Each machine has an estimated useful life of 10 years. minimum desired rate of return of 10%. The accountant has identified the following data: Machine A Machine B Machine C Present value of future cash flows computed using 10% rate of return $305,000 $295,000 $300,500 Amount of initial investment 300,000 300,000 300,000 Based on net present value method, which machine do you recommend?
Subject: acounting
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS